Mombasa County Services action to take over the ancillary activities, powers, duties, and obligations of the Kenya Ferry Services were inconsistent with the Ferries Act and the Constitution of Kenya, 2010

Kenya Ferry Services Limited v Mombasa County Services & 2 others

High Court at Mombasa

Constitutional Petition no 9 of 2016

M J A Emukule, J

November 28, 2016

Reported by Phoebe Ida Ayaya

Constitutional Law-devolution - national and county governments - cooperation between national and county governments – separation of services between the national and county governments - devolution of services - income generating services - ferry services - whether the ferry services operated by the Petitioner along the Likoni Channel to Lunga Lunga Mombasa – Lamu - trunk Road had been devolved to the County of Mombasa - Constitution of Kenya, 2010 articles 186, 189, 260

Constitutional law-fundamental rights and freedoms- breach of fundamental rights and freedoms—right to property-right to own and enjoy property- whether the takeover of the operations and functions of the Petitioner exercised in the suit properties was unconstitutional- whether the Respondent breached the Petitioner’s rights to property contrary to article 40 of the Constitution of Kenya 2010- Constitution of Kenya, 2010 article 40;  Gazette Notice No. 152 of 2013, Paragraph 5 

Civil Practice and Procedure –pleadings- defective pleadings- effect of defective pleadings- claim that the Petition was fatally defective, ex facie, incompetent, bad in law for lack of authority as there was no resolution to institute the Petition by the board of the company -  Civil Procedure Rules Order 2 Rule 15

Brief facts

The main issue raised by both the Petitioner and the Respondent was the division of the functions of the National and County Governments under the Fourth Schedule to the Constitution of Kenya, 2010 and in particular Part II which conferred upon the County Governments the function of county transport, including under paragraph 5(e), the function of operating ferries and harbors, excluding, the regulation of international and national shipping and matters related thereto.  The second issue raised concerned the concomitant question of division of assets between the National and County Governments.

Whereas the Petitioner contended that as an agency of the National Government, it was responsible for ferry services, and matters related thereto, the Respondent’s reply was that ferries and harbors was a function of the County Government.  It did not concern itself with the regulation of international and national shipping and matters related thereto.

The Respondent’s claimed that being a County Government created under article 6(1) of the Constitution of Kenya, 2010 (the Constitution), it was vested with power under the Fourth Schedule to the Constitution, and in particular sub-paragraph 5(e) of the Constitution, to manage transport and parking within the County of Mombasa, including the management of bus termini and collection of necessary fees and further, to license, collect revenue and other charges from businesses and other commercial enterprises and to issue permits at a fee for advertisement in all forms including bill boards, banners, display screens or advertisement branded on the vehicles to be created and displayed. The Respondent also claimed that the Petition herein was fatally defective and ex facie incompetent, bad in law on the ground that the Petition was filed without the Petitioner’s authority and that there was no resolution by the Petitioner’s Board approving the institution of the Petition.  On the contract between the Petitioner and the Interested Parties, (M/S My Space Properties Limited and Nova Media Limited) the Respondent contended that these were invalid because they were not executed under seal. It was also the Respondent’s contention that the Petitioner was operating a bus/matatu termini, hawkers’ stalls and outdoor advertising illegally because the said functions were devolved. On the loss of revenue, the Respondent claimed that it never demanded the handover of its properties or facilities but were concerned that the Petitioner’s actions had led to inefficiencies in the management of the ferries.  In other words, the Respondent said that it took over the said function from the Petitioner to enable the Petitioner concentrate on ferry operations, and also suggested that it could give assistance to the Petitioner to discharge its duties.

The Respondent contended that it took over the functions of the Petitioner on February 8, 2016 in a bid to restore order and increase efficiency in and around Likoni Ferry, and that it did so peacefully and without any altercation, because it was the responsibility of the Respondent to regulate and manage road transport, including Likoni channel. The Respondent also denied the subventions by the national government to the Petitioner as pleaded in paragraph 7 to the Petition, and other sources of revenue as pleaded in paragraphs 7, 8 and 9 of the Supporting Affidavit. The Respondent also denied the application or relevance of the letter dated February 24, 2016 by the Transitional Authority to the resolution of the dispute raised by the Petition herein. For all those reasons the Respondent urged the Court to dismiss the Petition herein with costs to the Respondent.

Issues

i. Whether the Petition herein was fatally defective, ex facie, incompetent, bad in law for lack of authority as there was no resolution to institute the Petition by the board of the company.

ii. Whether the ferry service operated by the Petitioner along the Likoni Channel to Lunga Lunga Mombasa–Lamu-trunk Road had been devolved to the County of Mombasa.

iii. Whether the takeover of the operations and functions of the Petitioner exercised in the suit property was unconstitutional.

iv. Whether the Respondent breached the Petitioner’s rights to property contrary to article 40 of the Constitution of Kenya, 2010.

Relevant Provisions of the law

Constitution of Kenya, 2010

Article 189 which is part of Chapter Eleven of the Constitution and is titled Part 5 – Relationships between Governments, (Cooperation between national and county governments) provides –

 “189(1)   Government at either level shall—

 (a) perform its functions, and exercise its powers, in a manner that respects the functional and institutional integrity of government at the other level, and respects the constitutional status and institutions of government at the other level and, in the case of county government, within the county level;

 (b)  assist, support and consult and, as appropriate, implement the legislation of the other level of government; and

 (c) liaise with government at the other level for the purpose of exchanging information, coordinating policies and administration and enhancing capacity.

 (2) Government at each level, and different governments at the county level, shall co-operate in the performance of functions and exercise of powers and, for that purpose, may set up joint committees and joint authorities;

 (3)  In any dispute between governments, the governments shall make every reasonable effort to settle the dispute, including by means of procedures provided under national legislation.”

Article 186 provides as follows –

 “186(1)    Except as otherwise provided by this Constitution, the functions and powers of the national government and the county governments, respectively, are as set out in the Fourth Schedule.

 (2) A function or power that is conferred on more than one level of government is a function or power within the concurrent jurisdiction of each of those levels of government.

 (3) A function or power not assigned by this Constitution or national legislation to a county is a function or power of the national government.

 (4)  For greater certainty, Parliament may legislate for the Republic on any matter.”

Article 260 - the expression “property” includes any vested or contingent right to or interest in or arising from –

 (a)  land, or permanent features on, or improvements to, land;

 (b) goods or personal property;

 (c)  intellectual property; or

 (d)  money choses in action or negotiable instruments.

Paragraph 5 of the Gazette Notice No. 152 of 2013–

 5.    County transport including

 (a) – (c)

 (d)   ferries and harbours including development, maintenance and operation of ferries and harbours operating in inland lakes and waters.

Held

1. The Petitioner was a body corporate both under the Companies Act, (Cap 486, Laws of Kenya, repealed), and a parastatal under section 2 of the State Corporations Act, being a company incorporated under the Companies Act which was wholly owned and controlled by the Government.
2. The legal attributes of a body corporate which was also a state corporation as so defined, is that it has perpetual succession, and in its corporate name be capable of suing and being sued.  That there was no initial resolution to institute the Petition or that there was no such resolution was a matter of internal regulation of the Company or in the instant case the Petitioner. 
3. The absence of a resolution could be a defence to the Petitioner against a claim by a third party.  It was no defence by the Respondent to the Petitioner’s case.  In the absence of fraud or anything untoward, the contention was a technicality which was abhorred by article 159(d) of the Constitution that enjoined the Court to deliver substantial justice, and not be subjected to technicalities of procedure.  The Petition was therefore neither defective, nor ex facie incompetent, nor bad in law.
4. The transfer of functions to County Governments was however subject to the provisions of the Transition to Devolved Government Act, enacted pursuant to articles 186(4) and 189(4) of the Constitution.  Sections 23 and 24 of the Transition to Devolved Government provided the criteria and procedure for transfer of functions to County Governments.
5.  Pursuant to section 15 of the Sixth Schedule to the Constitution as read together with sections 23 and 24 of the Transition to Devolved Government Act, 2012, and further to Legal Notice Number 16 of 2016, the Transition Authority approved the transfer of the functions specified in the Schedule to Legal Notice Number 152 of 2013, to the County Government of Mombasa. 
6. Paragraph 5(d) of the of the Gazette Notice No. 152 of 2013 had to be read and understood as whole, the function transferred to the Respondent was not merely to operate ferries and habours, but to operate and maintain ferries and harbours in inland lakes and waters.
7. The Transition Authority knew the existence of the Likoni Channel Ferry which was being operated by the Petitioner.  The allocation of the function did not clearly include the operation of Likoni Channel Ferry.  There was therefore no mistake in the Legal Notice transferring the ferry function in respect of lakes and inland waters but did not refer to the Indian Ocean, for example.
8.  The “grab” by the Respondent of the facilities and operations of the Petitioner in support of its core function of operating the deep Likoni Ferry Channel was not only contrary to all the provisions of Transition to Devolved Government Act, 2012, but its outright contrary to article 40 of the Constitution of Kenya, 2010.  Article 40 of the Constitution guaranteed the right of a person to own property of any kind whether alone or in association with others in any part of Kenya.  The expression “person” includes both “juridical” and “natural” person.  The Petitioner is a juridical person wholly owned by the National Government and its assets and associated facilities and operations are assets, facilities and operations of the National Government.
9. Once a person developed resources from which it derived income to supplement or otherwise its core functions, a defendant or respondent could not be heard to argue that it had not deprived that person of the use or income derived from such property.  It was with respect, a puerile argument to say, no one had taken the Petitioner’s property since after all the Petitioner was still the registered owner of the suit properties while in fact the Defendant/Respondent had deprived the Petitioner of the use and fruits of its investment.
10.  It was also sterile to argue that the facilities outside and either side of the channel were not developed in connection with and related to the ferry services offered by the Petitioner.
11. It was not a polite expression to employ in matters of Judgment, but “gang-ho” tactics by the Respondents were contrary to the clear provisions of the Constitution such as article 189(2) where Governments at the National and County Government were bound to cooperate, and 189(3), any disputes between governments including national and county levels of government were required to settle any disputes between them by negotiations through alternative dispute resolution mechanisms, including negotiation, mediation and arbitration.  It needed no reminder that under article 187(2) (b) of the Constitution, constitutional responsibility for the performance of the function or exercise of the power remained with the Government to which it was assigned by the Fourth Schedule.  Transport and communications, including in particular “marine navigation” was a matter assigned to the National Government under paragraph 18(f) of the Fourth Schedule to the Constitution.
12. The conclusion reached by the Chairman of the Transition Authority in his letter dated February 24, 2016 to the Respondents’ Governor was justified. The actions of the Respondent in taking over the Petitioner’s facilities which support its activities were against the letter and spirit of the Constitution of Kenya, 2010, and were therefore unconstitutional.

Petition allowed:

Orders

1. the Petitioner’s right to the protection of its property held by law and protected from arbitrary deprivation by the Respondent as well as its right to fair administrative action was breached by the Respondent;
2. the Respondent’s actions to take over the ancillary activities, powers, duties, and obligations of the Petitioner were inconsistent with the Ferries Act Chapter 410, the Companies Act (Cap. 486, now repealed), Legal Notice Number 152 of 2013, and therefore the Constitution of Kenya, 2010;
3. the Respondents proposed law called Mombasa Port Authority Bill and Mombasa Ports and Habours Bill 2014 was inconsistent with the provisions of articles 201 and 209(5) of the Constitution of Kenya, 2010, and was and would consequently be null and void in terms of article 2(4), thereof;
4. An order directing the Respondent, its servants, agents or other persons to granting the personnel of the Petitioner to take over the operations of the Petitioner’s facilities ancillary to functions of the Petitioner as the Likoni Ferry Operator issued;
5. An order that pending agreement between the national government and the Respondent, prohibiting the Respondent from interfering, taking over, collecting rent, or any other levies within the confines of the facilities erected and situated on Plot No. MS/1/1762 and MS/1/1763 issued;
6. Pending agreement between the national government and the Respondent, an order prohibiting the Respondent from taking parking areas, waiting bays, termini, rental space and buildings and advertising space currently or hereafter contracted by the Petitioner to third parties;
7. An order that the Respondent shall account and refund to the Petitioner all the sums of money collected as rents, gate fees and rental space fees and advertising space from February 1, 2016 till the Judgment herein, and from the date of Judgment with interest (at the rate of Kshs. 1,500,000/= in (respect of business stalls, bus/matatu termini next to the mainland ramp), Kshs. 1,040,000/= per month (in respect of advertising and media space, and LED Screen Displayers, escalated to Kshs. 1,812,000/=;
8. An order for compensation by way of damages at the average rate of Kshs. 2,580,000/= per month in respect of lost revenue from motor vehicles, tuk tuks, motor cycles, bicycles and handcarts using the Petitioner’s landing facilities, and termini;
9. The Respondent shall also pay the Petitioner the costs occasioned by the unconstitutional and unlawful acts of the Respondent;
10. The Petitioner shall hand over to the Petitioner the complete operations of the Likoni channel Ferry together with all ancillary facilities within fourteen (14) days of the date of the Judgment.